If consumers suddenly lose interest in a product, what is the most likely effect on the market equilibrium for that product?

• A. The equilibrium price and quantity will both decrease.
• B. The equilibrium price and quantity will both increase.
• C. The equilibrium price will increase while quantity decreases.
• D. The equilibrium price will remain unchanged, but quantity will increase.

Answer: (A)

Verified step by step guidance

1. Step 1: Understand the concept of demand in microeconomics. Demand represents the quantity of a product consumers are willing and able to buy at different prices. A change in consumer preferences, such as losing interest in a product, affects demand directly.
2. Step 2: Recognize that if consumers lose interest in a product, the demand curve shifts to the left. This means at every price level, consumers want to buy less of the product than before.
3. Step 3: Recall that the market equilibrium is determined by the intersection of the demand and supply curves. When demand decreases (shifts left), the new intersection point with the supply curve will be at a lower price and lower quantity.
4. Step 4: Conclude that a leftward shift in demand leads to a decrease in both the equilibrium price and the equilibrium quantity because suppliers must lower prices to sell the reduced quantity demanded.
5. Step 5: Summarize that the most likely effect of consumers losing interest in a product is a decrease in both the equilibrium price and quantity in the market.